T-Mobile, MetroPCS deal: what it means for you

News Marin Perez 11:22, Oct 03 2012

With T-Mobile and MetroPCS merging, we break down what the impact will be for new and returning customers

T-Mobile and MetroPCS will be merging and this could be a major shakeup in the wireless world. Let's take a look at what this deal will mean to the players involved and to you.  

What happened? Why? 

After we heard rumors of a deal Tuesday, T-Mobile and MetroPCS confirmed the merger this morning, which is aimed at creating a fourth major network that can really compete against Sprint, Verizon and AT&T over the next few years. Under the terms of the deal, MetroPCS shareholders will receive $1.5 billion in cash and own 26 percent of the combined entity. Deutsche Telekom, parent company of T-Mobile USA, will own a 74 percent stake in the new carrier. 

The new company will retain the T-Mobile brand name but interestingly enough, the investor presentation constantly refers to the entity as "NewCo." The move could give the new company enough resources to compete over the next few years.

The new T-Mobile (or "T-Metro?") will have roughly 42.5 million users, but it still trails third-place Sprint and it's still way behind AT&T and Verizon. There's also the nagging fact that MetroPCS has a lot of its network on CDMA while T-Mobile is GSM. 

But that technology difference may not matter much and the move does give T-Mobile enough nationwide spectrum to really boost its 4G LTE rollout. On the conference call announcing the deal, executives said that the new T-Mobile will continue to focus on low-cost 4G service and that unlimited data will continue to play a major role. 

What happens to existing MetroPCS customers? 

There's good news and bad news for existing MetroPCS customers: The new T-Mobile will likely deliver better phones and services but you'll have to get a new phone by the end of 2015. According to PCMag, the new T-Mobile will sunset its 1XCDMA network in a few years to use that spectrum for 4G LTE and the more standardized HSPA+ GSM technology. 

On the bright side, executives have said that MetroPCS customers already have a high handset turnover rate (60-65 percent), so users may have been looking for a new device anyway. Once the transition is complete, the new T-Mobile may offer better device selections. Additionally, having the T-Mobile network will give MetroPCS users much wider reach. 

Many users are on MetroPCS because it offers really good monthly plans without long-term contracts. Executives of the new T-Mobile said it will be going after these no-contract customers aggressively, but it will also be offering these users contract options with "no surprises." 

What happens to existing T-Mobile customers?

If you're on T-Mobile right now and are happy with your service, you should be excited because this move should improve network quality and handset selection over the next few years. 

The company says the new T-Mobile will focus on simplicity, unlimited data and "no surprises" for its contract customers and its no-contract customers. By repurposing the MetroPCS spectrum, the new T-Mobile should be able to deliver faster 4G LTE services and the additional subscribers means it may be able to offer better devices. 

MetroPCS has also done a great job at providing customer service and alternate ways to pay for your service (automated payment kiosks, etc.) and you can look forward to that coming to the new T-Mobile. 

I'm not on either network, what's in it for me? 

The new T-Mobile may have the assets to deliver some fantastic 4G LTE in a variety of markets. After repurposing spectrum and moving away from CDMA, the combined entity will have a lot of prime-time spectrum in the top 25 major metropolitan areas. The new T-Mobile is also moving aggressively to offer its expanding capabilities. 

The new T-Mobile may also become the best option for those looking for a bargain, BGR argues. It will be using aggressive pricing, unlimited 4G data and no-contract options to woo customers away from AT&T, Sprint and Verizon. It will also soon have a nationwide 4G LTE network that may actually outperform the competition in some key cities. 

It's not all going to be roses though, as a merger of this size is bound to have some unforeseen hurdles. Sunsetting the MetroPCS CDMA network by 2015 and moving to LTE and HSPA+ sounds great in a presentation, but the actual implementation may be more difficult. Additionally, the new T-Mobile will have a 4G LTE network that still works on the somewhat wonky AWS bands, and that may keep some key devices off the network. 

Even if the merger and transition goes through without a hitch, 2015 is still a long time away and that just gives the competition more time to cement its lead. Verizon already has more 4G LTE markets than the other carriers combined, AT&T's 4G LTE network is blazing fast and growing every day and Sprint has a ton of spectrum for its 4G LTE rollout.

Will T-Metro get the iPhone? 

T-Mobile and MetroPCS share another common element: Neither carrier offers the iPhone and it is hurting both networks. T-Mobile has been repurposing some of its spectrum to let unlocked iPhones run on its 3G network, but that's not the same as being able to sell it and have it work well in all of your markets. 

Executives at the new T-Mobile didn't get asked about whether it would offer the iPhone, but one would hope that this is a priority. The move for 4G LTE on AWS bands may remain an issue to get the iPhone but I think the new T-Mobile will eventually work that out. 

Here's what T-Mobile has to say about the deal: 

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